Tesla CEO Elon Musk’s legal team has recently filed a motion demanding the disqualification of Delaware Chancellor Kathaleen McCormick from an ongoing Tesla shareholder lawsuit. The motion, submitted on March 25, is based on a LinkedIn “support” reaction from McCormick’s account to a post celebrating a $2 billion jury verdict against Musk in a separate California securities-fraud case.
This development further intensifies the existing tensions between Musk, Tesla, and the Delaware judiciary, particularly in light of McCormick’s previous involvement in the challenge to Musk’s record $56 billion 2018 compensation package. Known for presiding over the landmark case, McCormick’s role in the Tesla pay-package litigation has been central to the ongoing legal battle.
The LinkedIn post in question was authored by Harry Plotkin, a Southern California jury consultant who assisted the plaintiffs in a lawsuit against Musk over tweets related to his Twitter acquisition. Plotkin commended the trial team for their efforts in standing up against the richest man in the world. The post included a banner stating, “Katie McCormick supports this,” using LinkedIn’s heart-in-hand “support” icon, which Musk’s legal team argues creates a perception of bias against him, prompting the call for McCormick’s recusal.
In response to the motion, McCormick denied intentional endorsement, claiming that she was unaware of the interaction until notified by LinkedIn. She stated that she either did not click the “support” icon at all or did so accidentally, though she expressed doubts about accidentally endorsing the post given the deliberate interface of the platform. Critics, including Musk allies, have questioned the credibility of her explanation.
McCormick’s previous ruling on the 2018 performance-based stock-option grant in the Tornetta v. Musk case, which she deemed invalid due to various deficiencies in process and disclosure, underscores the significance of her role in the ongoing legal saga. Despite her initial ruling, the Delaware Supreme Court later reversed the rescission remedy, restoring the package but awarding nominal damages and reduced attorneys’ fees to the plaintiff.
The current recusal motion marks another chapter in the Tesla derivative suit before McCormick, with implications for judicial social-media activity and perceptions of the Delaware bench. The outcome of the motion could impact corporate migration trends out of Delaware, as seen with Musk’s decision to move Tesla’s incorporation to Texas following the initial ruling. The episode highlights the delicate balance between judicial independence and public confidence in high-profile litigation.
As the decision on the recusal motion looms, the legal community awaits the verdict, which could have far-reaching implications for future corporate governance disputes and the reputation of Delaware’s specialized courts. The ongoing legal saga involving Musk, Tesla, and the Delaware judiciary serves as a reminder of the complexities and challenges inherent in high-stakes litigation within the corporate world.